(SmartMoney.com) — Buy-and-hold stock investors have long been counseled to calmly endure the market’s short-term price swings in order to collect its handsome long-term returns. Now, two things are making that advice more difficult to accept. First, market movements have become more violent. Forget for a moment about last Thursday afternoon, when erroneous trades contributed to the Dow Jones Industrial Average losing as much in a half-hour as it gains in a typical year. Forget, too, about Monday’s near-4% rise in U.S. shares, attributed to a European bailout plan that seems to solve few of Europe’s long-term fiscal problems. Focus instead on the S&P 500. It’s been just over a half-century since the index was first published in its current form, and 12 of its 20 largest daily percentage changes have occurred since the start of 2008.
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